Where’s the key to the liquor cabinet?
Yesterday, I referenced a shorthand version of a business plan outline. Most of you saw the words "business plan" and immediately started looking for the key to the gun cabinet,…
What are the right questions?
I've written numerous posts about business plans ... the importance of preparing them, what should be in them, etc. Seth Godin has another, very simplified concept about what's really needed:…
Is anyone really independent?
I wish had the time to write about all that’s on my mind about the SEC charges vs. Goldman. The crux of my most recent post was that institutional investors – not individual investors – have few excuses for making unsuccessful investment decisions except their own lack of due diligence or the fact that what they thought was a good decision … wasn’t.
I’m happy to see that Warren Buffett agrees as he told his rapt audience in his comments at Berkshire Hathaway’s recent annual shareholder’s meeting. Of one firm, ABN Amro, Mr. Buffett said: “It’s hard for me to get terribly sympathetic when a bank makes a dumb credit bet.” (more…)
Business Finance | Does EBITDA Bury Its Own Dead?
Does EBITDA really tell you what you need to know?
“I have enough money to last me the rest of my life … unless I buy something.”– Jackie Mason
Does this sound like you?
Someone recently told me that they’re bored by finance. “Don’t distract me with strategic finance stuff, just let me run my business the way I know how.”
“No problem,” I said, “if you’ll just answer one question. What if the way you’re running it is causing increasing strain on your financial resources, cash flow is dwindling and you’re destroying market value every year. Do you care about any of that?”
“Of course, I do, but when sales start picking up again, all of that will go away and my EBITDA will return to normal levels.”
“Really?” I said. “How do you know that?”
“That’s the way it’s always worked.”
“Have you had any problems with your banking relationship?” (more…)
Goldman Sachs -Not so fast!
Will Rogers was fond of saying, “Buy low, sell high … and if it doesn’t go up, don’t buy it!”
That’s a whimsical sentiment, but I wonder what’s in the air when I read about the alleged fraud by Goldman Sachs described in the civil complaint filed by the SEC, referenced in the recent article here. I wouldn’t jump to conclusions too quickly. In too many ways, this episode is reminiscent of earlier 1980s battles with Michael Milken. Notwithstanding Milken’s misdeeds, my vivid memory is that there were accredited investors and savvy buyers on both sides of those transactions perfectly capable of making independent decisions. Some of them were wrong and they lost money, but in virtually every case, they were well-equipped to make sound decisions … if they did their homework.
These challenges typically arise when people lose money … and there’s no question a lot has been lost. But, to assume that people who lose on one side of a transaction, are incapable of making prudent independent decisions and were sold a bill of goods , is the flawed argument that often pervade these matters. (more…)